Wealthy parents are increasingly gifting more of their funds to charity amid a rising inheritance tax (IHT) burden, a new study by Rathbones has indicated.

More than half (53%) of the parents surveyed by the wealth manager had increased their charitable donations over the past two years.

With nil-rate bands frozen and pensions set to be included in estates from April 2027, more families are facing rising IHT bills. Charitable donations can ease this burden, as gifts to charity are IHT-free and leaving 10% of an estate to charity cuts the IHT rate from 40% to 36%.

Rathbones conducted a targeted study of high-net-worth parents with average wealth of more than £3m in total assets and found that three out of four (75%) believe that leaving too big an inheritance can be a “curse” on their children’s lives, and were considering ways to avoid the problem.

The wealth manager also found that over three fifths (61%) of respondents revealed they were concerned that any money left to children will be used irresponsibly. Inheritance worries were not just about the curse of being left too much money – as 57% said their adult children already had enough money and there were “more important uses for their assets”.

Head of charities distribution at Rathbones, Gemma Gooch, said: “Our analysis shows many wealthy parents, already concerned about inheritance tax, fear the impact of too big an inheritance on their children’s aspirations and drive.

“It is therefore no surprise that more are increasingly turning their attention to charitable giving. Incorporating charitable giving into financial planning allows parents to create a meaningful legacy, support causes close to their heart and potentially pass on a greater share of their estate to their chosen beneficiaries, rather than the taxman.”

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